The Supreme Court sounds the final death knell for Uber

15th March 2021

The Supreme Court sounds the final death knell for Uber

We first reported on the case of Aslam and others v Uber BV and others some 5 or 6 years ago. The Employment Tribunal held that Uber taxi drivers were workers, rather than self-employed contractors, and were therefore entitled to be paid the national minimum wage, and to paid annual leave and rest breaks. Uber appealed the decision to the Employment Appeal Tribunal (EAT) and then the Court of Appeal and at both stages lost.

The case has now finally made its way to the Supreme Court, the highest court in England and Wales, and we are now able to report its decision.

Lords Leggatt, Reed P, Hodge, Sales, Hamblen and Lady Arden, all unanimously agreed that Uber drivers are workers. The definition of a ‘worker’ is set out in section 230(3) of the Employment Rights Act 1996. This includes employees and those working under ‘any other contract…whereby the individual undertakes to do…personally any work…for another party’ as long as the party for whom they provide the work isn’t their client or customer.

Gig economy cases, including this one, have shown that the written contract in place is not necessarily a true reflection of what happens in practice. The Supreme Court has therefore said that whilst the contract should not be ignored, the starting point should be to look at the statutory definition.

The statutory provision was designed to protect vulnerable workers and prevent them from being underpaid; required to work excessive hours, or otherwise being treated unfairly. The Court noted that often there is inequality of bargaining power for those working in the gig economy. In Uber, for example, the drivers were entirely dependent on Uber for work. The Court said that in view of the fact that the contract was drafted by Uber, the party who in practice has all the power, the contract is secondary. Protection from national minimum wage legislation and the right to paid holiday would be undermined if an organisation could circumvent those rights by shrewd contract drafting.

The facts of the case demonstrated that Uber had significant control over the drivers that worked for it. It chose the cars they drove; how much a customer was required to pay; and the extent to which drivers could accept work offered to them or decline it. The Supreme Court held that this level of control over the drivers made them workers. Conversely, someone who was genuinely self-employed would be able to make such choices for themselves. The contracts were drafted in such a way as to disguise the reality of the relationship to the company’s benefit.

The message for businesses is that whilst contracts are important, the starting point for determining worker status is section 230(3) of the Employment Rights Act 1996, and no amount of clever drafting will override that.  Since the Supreme Court agreed with the Tribunals and Court before it that the drivers were working not only when they were driving, but also when they were logged into Uber’s app, Uber’s compensation bill is going to be enormous, and that’s without factoring in paid annual leave entitlement. Who has all the power now?

For more information on worker status and how this decision might affect your business, please contact Marie Allen on 01473 298133 or [email protected].

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